VIDEO LESSON - Introduction to the Canadian Dollar

There are two dominant themes that it is important to understand when
analyzing the Canadian Dollar from a fundamental standpoint. The first,
as its designation as a commodity currency implies, is the fact that
exports of natural resources (especially gold and oil) make up a
significant part of the Canadian economy. This is important to
understand because as Canada is the world's 14th largest producer of oil
and 5th largest producer of gold, the price of these and other
commodities normally has a direct affect on the Canadian Dollar's
Exchange rate.

The second thing that it is important to understand here, is the fact
that as the Canadian population is relatively small in comparison to its
land mass, the economy is heavily reliant on exports, which ties the
country more closely together with the international economy as a whole.
This is particularly true in regards to economy of the United States,
as the US is Canada's largest trading partner, and 81% of Canadian
Exports flow to the US.

While many people believe that the US relies most heavily on the middle
east for its oil imports, it is actually Canada that is the largest
supplier of oil to the United States. As the US is the world's largest
oil consumer and Canada is one of the largest producers, fluctuations in
the price of oil have double the impact. As we learned in our lesson
on trade flows, as the US is a net oil importer and Canada is a net oil
exporter, then all else being equal, a rise in the price of oil should
strengthen the CAD and weaken the USD.

While exports of commodities are still a very important component of the
Canadian economy, the country's service sector has experienced massive
growth in recent decades, to the point where the service industry now
accounts for 2/3rds of the country's economic output. This is important
to understand because, as the United States is its largest trading
partner, a slowdown in the US Economy can hurt the Canadian economy and
its currency, even if commodity prices remain high.

As we see from the daily chart so the price is on secondary correction within the primary bullish market condition: price broke symmetric triangle pattern to below for 1.2831 support level as a next target for the daily bearish reversal: